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Members of the City Council City of St. Anthony, Minnesota Liquor Inventory Liquor inventory increased approximately $50,000 or 12.5% in 1994 compared to 1993. This increase was attributed to an increase in beer purchases at year end (a 6 to 8 week supply) to avoid a price increase. anticipated in 1995 and an increase in wine merchandise (new product items) . As a result, wine merchandise accounted for 30% of the total inventory; whereas, wine sales accounted for 16.8% of total sales. The concern is that perhaps some of the wine inventory contains slow moving and possibly obsolete merchandise, which should-be properly reduced to retail value for inventory purposes (if less than cost ). Discussions with the liquor manager revealed that an effort to turnover- certain wine merchandise was in process with the result being the elimination of older, slow moving products. This process was on-going and was not completed at year end and with the purchase of new products resulted in a higher than normal wine inventory. The taking of liquor inventory at year end appeared to be accurate and conducted in an orderly fashion based upon inventory observation and test counts performed. How- ever, at the SAV II outlet, it was noted that when inventory merchandise is located in more than one area in the store, the quantity in all areas is combined and listed as a single quantity in the inventory records. Current practice is to change the original count to reflect the additional quantity counted; it would be an improvement in inventory procedures if the different counts were listed separately in the, inven- tory records. This practice made matching inventory test counts with the inventory • listing difficult, especially when resolving inventory differences. In addition, after the counts were completed and the listings combined by product for input into the computer, the original counts were erased and a single total recorded. This pro- cedure prevented testing the mathematical accuracy of combining the .various counts. The erasure of original counts or information should not be permitted. As much detail supporting the inventory should be retained, without being altered. Given the liquor industry's nutrition rate in personnel , proper inventory instructions and procedures should be reviewed' with. persons assigned to counting inventory prior to all future inventories. The gross profit percentages (based on actual sales and costs) by product line com- pared quite favorably with percentages provided by the manager. The only major excep- tion was tobacco sales at the SAV II outlet. Based upon accounting records it appears that the store incurred a slight loss on sales from tobacco products, compared to the mark up percentage of 20%. Record keeping for this variance was unavailable, although the manager is going to discuss and review this situation with the store manager. Recycling Grants Better grant documentation is needed to support the reimbursements requested from the counties. During the audit, staff was unable to locate grant reimbursement requests filed for the first half of the year for recycling grants. However, it appears reim- bursement of costs incurred and charged to the program were filed properly. Copies of requests and sufficient supporting documentation should be maintained in the appro- priate files to permit staff to prepare and submit the necessary documentation for reimbursement in the event that personnel changes occur in employees who are respon- sible for administration of the program.